There’s one section of legal tender, which constitutes one of the great frauds of all times, and that is:
When FDR got Social Security started in 1933, there was supposed to be created a “trust,” into which the 1% deduction for the rich was supposed to be placed, for the benefit of future retirees. There were many workers for each retiree, as opposed to the current three, and in the future, two. The problem with it, was not the number of people supporting the others, or the declining ratios, but the very fact of it. It was actuarially unsound from the very beginning. An actuary, is a person who determines what rates to charge insurance policy holders, what the risks are for the insurance company, and what can be insured at a profit, among other things. An actuary would have cringed in pain, if he or she had glimpsed at FDR’s plan, because it was a guaranteed loss for the insurer, the United States Government.
A couple of decades ago, the government ran short of cash. After looking around, some bright bureaucrat discovered hundreds of millions of dollars in the Social Security Trust Fund, which was just sitting there, earning no interest, and not doing anything but parking itself in government bank accounts. What a bonanza! “Let’s just take all those dollars, place them in the general fund, pay our bills with them, and replace the stolen dollars with IOU’s. We own the thing, so we can take it if we please, and replace it as is necessary,” might have been the attitude. The Social Security Trust Fund was emptied, and in place of the hundreds of millions of dollars, are IOU’s signed by Uncle Sam. There’s not a red cent in the fund.
If the fund had been started with silver coins or gold backed dollars, rather than legal tender dollars, a lot of people would have screamed bloody murder at the huge physical removal of all that gold and silver from the Trust Fund. Imagine that the government had placed physical gold and silver into a trust fund, and it was all physically stored in one place. Scrooge McDuck would have been proud. The legal tender scam was done before Social Security was established. The legal tender was created when the gold was ordered to be turned in. And before we go any further, let’s examine the constant question I am asked, and that is about:
Gold was never confiscated, no matter what yarns are told by those who benefit from such falsities. Think about it, and if you want a further explanation, go to the bottom of this column by clicking on other columns I have written. There are two on confiscation. But briefly, if gold was to be confiscated, isn’t it reasonable to think that the government would stop selling it first? And then, wouldn’t they take the mines first, and prohibit its import? And how are they to know who has it in the first place? Gold coins have no serial numbers on them, and are not registered, as is an auto, home, share of stock, or savings account. If it ever was made “illegal,” or ordered to be turned in, it would simply go underground, thereby tripling its actual price. Look at drugs, guns, or prostitution, if you want to see how effective government is at banning things. Confiscation? Hardly!
There are constant fears about Social Security running out of money when the output is greater than the input, which it already is. The way to avoid that, naturally, is to raise the input, which the government has done continually over the years. From 1% from the wealthy, to close to 18% from everyone, and it still will run out in a few years, as more baby boomers retire and begin applying for it. Then, they can raise the age at which one can get it, and this goes over like a lead balloon. Medicare and Medicaid are even shakier than Social Security, and actuarially absurd. They were from their inception, and are getting worse each year. With legal tender, there is no worry, because the presses can and will run, to pay everyone the dollars they are due regardless of their value. Those who think they’ll not get their Social Security are wrong. They will in scrip, known as dollars, which are legal tender.
Today, the Republicans are for taking part of the Social Security you pay in, if you so decide, and allowing it to be invested in the stock market. The Democrats say absolutely no, because the fund is close to empty anyway, and by taking even more out of it, it would fail all the faster. They’re correct. However, throughout the 20th century, even with its ups and downs, the stock market, in general, has yielded a 10% return. Naturally, some stocks return nothing, and even disappear, but there is a risk in everything. Social Security has yielded nothing. If, as an example, $500 per month had been invested at 10% over a 40 year working period, the reward for the retiree would be about $5,000 per month, and the principal would still be there! $500 per month would have been far too high 40 years ago, for a middle class person, but today, it would be far too little, so I have averaged it out over the 40 year period at $500 per month, which is what a middle income person would have placed in his Social Security Trust Fund which has nothing in it.
$500 per month put in, would be $5,000 a month return, and $100 per month saved at 10% interest for 40 years, $1,000 per month return, with principal still intact.. Even with legal tender paper dollars, this would be a much nicer return, than anyone gets from Social Security. Now, suppose the government had invested the legal tender dollars they have confiscated for Social Security, and invested it with compound interest. Suppose, rather than taking the dollars and replacing them with IOU’s, they had invested the dollars and gotten a 10% return on their investments. The trust fund would be adequately supplied, and never run out. The inputs would never have had to be increased continually, as they have, and with no end in sight.
If government had been throttled in its actions, as always happens under a gold standard, the dollar would still be sound, gold would be $20.67 per ounce, there would have never been inflation, and a Coke would still be a nickel. Social Security, even if it had been passed, would still have been actuarially unsound, but it would have been so with maybe no more than a doubling of its previous 1% input from the wealthy.
Legal tender, allows banks to make loans without having dollars deposited to cover the loans. Legal tender, allows banks, in other words, to create money out of nothing, just like the Federal Reserve does. This is known as the “fractional reserve” banking system, and it is just as much of a fraud as is the central bank, and legal tender in general. The debasing of a currency, (legal tender), is in 100% of the cases, theft from the citizen, and glorifying the government and politicians who issue it. Why? Reminds me of a joke. There’s a guy in a slave labor camp. Every day, as he leaves the camp for his barracks, he has a wheelbarrow full of dirt. “Halt,” says the guard, and he inspects the dirt and finds nothing but dirt. He lets him go. Day after day, the guard stops the guy, and day after day, he finds nothing but dirt. Finally, he stops the guy and asks him, “Look, I know you’re stealing something, but not dirt. What are you stealing?” They guy says “Wheelbarrows.”
The legal tender system is the dirt in the wheelbarrow, and the wheelbarrow is the money that is being stolen from the citizenry I guess. The politicos say they’re “fighting inflation,” and Greenspan is thought of as a genius. The populace votes for either the Democrats or Republicans, but they’re both the same as far as increasing the supply of legal tender. The more of it there is, the less it is worth, and this is theft from the citizens who voted for them. Banks loan legal tender they don’t have on deposit, thereby increasing the money supply, and now that foreign nations have slowed appreciably in buying US debt, the government is buying its own debt, thereby further increasing the supply of legal tender. All the while, the dumb citizenry has faith in the paper, and saves in it in CD’s and bonds denominated in the legal tender. It’s a vicious circle, which is now unstoppable. Protect yourself!